Davenport v Lockwood Andrews & Newman et al., 2017 WL 1457945 (6th Cir. April 25, 2017).
In reversing the United States District Court for the Eastern District of Michigan’s (the “District Court”) order granting the plaintiffs’ motion to remand, the United States Court of Appeals for the Sixth Circuit (the “Sixth Circuit”) found that the Class Action Fairness Act (“CAFA”) was not to be read narrowly, but as a broad grant of jurisdiction in interstate class actions. Furthermore, the Sixth Circuit found CAFA’s local controversy exception was not to be read to create a jurisdictional loophole by which a plaintiff could defeat federal jurisdiction.
The plaintiffs, residents of the City of Flint, Michigan (“Flint”), brought a putative class action in Genesee County Circuit Court against the defendants, civil engineering and environmental services firms hired by the city, for their alleged roles in residents’ exposure to lead from Flint’s public water system.
This case is one of the numerous actions arising from the water crisis in Flint. The Flint public water system included lead pipes. Prior to April 2014, Flint purchased treated water from the City of Detroit and thereafter, the city began using the Flint River as its water source. The Flint River’s water was not treated with corrosion-inhibiting chemicals, which led to a multitude of serious problems with the local water supply. The residents complained the water was discoloured and foul-smelling and there were reports of skin rashes, hair loss, and vomiting after drinking and bathing in the water. Most disturbingly, many Flint children were found to have high levels of lead in their blood stream.
Flint hired defendant Lockwood, Andrews & Newnam, P.C. (“LAN”) to advise the city with respect to using the Flint River as its water source, and hired defendant Veolia Water North America Operating Services, LLC (“Veolia”) as a water expert to evaluate the city’s water-treatment process. The plaintiffs sought damages from Veolia and LAN for the harm they allegedly suffered as a result of the contaminated Flint water.
Veolia removed the case to the District Court pursuant to CAFA. The District Court subsequently granted the plaintiffs’ motion to remand under CAFA’s local-controversy exception. On appeal, the Sixth Circuit reversed the District Court’s order.
It was undisputed that, prior to the filing of the instant case by the plaintiffs, Flint residents filed other class actions against Veolia, LAN, and various other persons and entities seeking damages for injuries allegedly caused by the lead contamination in Flint’s water system. One of the first such cases was Mason v. Lockwood, Andrews & Newnam, P.C., 842 F.3d 383, 387 (6th Cir. 2016), which was initially filed in state court, and then removed to district court, only to be remanded back to state court under the local controversy exception. (Editors’ Note: See the CAFA Law Blog anaysis of Mason posted on March 20, 2017). The court in Mason, however, did not address whether other class actions had been previously filed or the meaning of the “other class actions” provision in 28 U.S.C. § 1332(d).
The Sixth Circuit noted that for questions of statutory interpretation, they look to the statutory language as the starting point for interpretation, and the ending point if the plain meaning of that language is clear. The Sixth Circuit further noted the plain language of CAFA’s § 1332(d)(4)(A)(ii) states that the local controversy exception will apply only if no other similar class action was brought against any of the defendants in the instant action during the three years preceding the filing of the case. The Sixth Circuit found that because it was undisputed that five class actions were brought, each advancing very similar factual allegations, and each action sued at least one of the defendants currently in the instant suit, the local controversy exception could not apply. The statutory language was clear and unambiguous, and the District Court retained jurisdiction pursuant to CAFA.
The plaintiffs argued this was not an interstate class action at all but an entirely local one, because it concerned injuries suffered by the residents of Flint in Flint. The Sixth Circuit, however, found that the controversy was not local in the way Congress contemplated under CAFA. The Sixth Circuit opined it was the alleged conduct of primarily out-of-state defendants that caused the plaintiffs’ injuries, and the class actions filed surrounding the Flint water crisis would have long-lasting implications for interstate commerce and would be felt far beyond the Flint, Michigan region. The Sixth Circuit further found that courts agreed any doubt about the applicability of the local-controversy exception should be resolved against the party seeking remand.
The plaintiffs also argued Congress’s intent when enacting CAFA was to eliminate “copycat, or near copycat, suits in multiple forums.” The Sixth Circuit, however, found that there were also policy goals behind CAFA that supported the plain-language reading of the statute in the instant case. The Sixth Circuit opined CAFA was not to be read narrowly, but as a broad grant of jurisdiction in interstate class actions, and the local controversy exception was not to be read to create a jurisdictional loophole by which a plaintiff could defeat federal jurisdiction.
Accordingly, the Sixth Circuit reversed and remanded the District Court’s judgment.